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Russia Quietly Starts to Shift Its Oil Trade Into Rubles

The New York Times is reporting today on a curious development in Russian energy trading. The news is that Russia has been “quietly preparing” to switch its trading in Russian Ural Blend oil, its primary export, from the dollar to the ruble. Oil trading is typically done in dollar transactions, and Russia’s major trading with Europe is conducted in dollar denominations. Given this, the initiative is likely going to appear to many as another audacious move by the Kremlin, by now noted for its projects of “swagger and ambition”. It is thought that the move is partly related to the dollar’s current weak position, and Russia’s drive to strengthen the ruble, which is “a new source of national pride after gaining 30 percent against the dollar during the current oil boom.” Dmitry Medvedev, speaking on economic policy this month, said that if Russia took advantage of the unease in the global economy, “the ruble will de facto become one of the regional reserve currencies.” The article outlines the Kremlin’s tactics: “In a sign of the government’s seriousness, a new glass-and-marble high-rise home for a ruble-denominated commodity exchange is rising this spring in a prestigious district in St. Petersburg, Russia’s second-largest city after Moscow. […] The director of the St. Petersburg exchange, Viktor V. Nikolayev, said that the intention was to move slowly and gain market acceptance.” Read the full article here.